UPDATE 4-U.S. Fifth Fleet says won't allow Hormuz disruption

* President Ahmadinejad implies no nuclear compromise
(Recasts with comments from U.S. Fifth Fleet)

By Parisa Hafezi and Humeyra Pamuk

TEHRAN/DUBAI, Dec 28 The U.S. Fifth Fleet
said on Wednesday it would not allow any disruption of traffic
in the Strait of Hormuz, after Iran threatened to stop ships
moving through the world's most important oil route.

"Anyone who threatens to disrupt freedom of navigation in an
international strait is clearly outside the community of
nations; any disruption will not be tolerated," the
Bahrain-based fleet said in an e-mail.

Iran, at loggerheads with the West over its nuclear
programme, said on Tuesday it would stop the flow of oil through
the Strait of Hormuz in the Gulf if sanctions were imposed on
its crude exports.

"Closing the Strait of Hormuz for Iran's armed forces is
really easy ... or as Iranians say, it will be easier than
drinking a glass of water," Iran's navy chief Habibollah Sayyari
told Iran's English-language Press TV on Wednesday.

"But right now, we don't need to shut it ...," said Sayyari,
who is leading 10 days of exercises in the Strait.

Analysts say that Iran could potentially cause havoc in the
Strait of Hormuz, a strip of water separating Oman and Iran,
which connects the biggest Gulf oil producers, including Saudi
Arabia, with the Gulf of Oman and the Arabian Sea. At its
narrowest point, it is 21 miles (34 km) across.

But its navy would be no match for the firepower of the
Fifth Fleet which consists of 20-plus ships supported by combat
aircraft, with 15,000 people afloat and another 1,000 ashore.

A spokesperson for the Fifth Fleet said in response to
queries from Reuters that, it "maintains a robust presence in
the region to deter or counter destabilising activities",
without providing further details.

A British Foreign Office spokesman called the Iranian threat
"rhetoric", saying: "Iranian politicians regularly use this
type of rhetoric to distract attention from the real issue,
which is the nature of their nuclear programme."

SANCTIONS

Tension has increased between Iran and the West after EU
foreign ministers decided three weeks ago to tighten sanctions
on the world's No. 5 crude exporter, but left open the idea of
an embargo on Iranian oil.

The West accuses Iran of seeking a nuclear bomb; Tehran says
its nuclear programme is for peaceful purposes only.

The Iranian threat pushed up international oil prices on
Tuesday although they slipped back on Wednesday in thin trade.

"The threat by Iran to close the Strait of Hormuz supported
the oil market yesterday, but the effect is fading today as it
will probably be empty threats as they cannot stop the flow for
a longer period due to the amount of U.S. hardware in the area,"
said Thorbjoern bak Jensen, an oil analyst with Global Risk
Management.

The Strait of Hormuz is "the world's most important oil
chokepoint", according to the U.S. Department of Energy. About
40 percent of all traded oil leaves the Gulf region through the
strategic waterway.

The State Department said there was an "element of bluster"
in the threat, but underscored that the United States, whose
warships patrol in the area, would support the free flow of oil.

France urged Iran on Wednesday to adhere to international
law that allows all ships freedom of transit in the Strait.

Iran's international isolation over its defiant nuclear
stance is hurting the country's oil-dependent economy, but
Iranian officials have shown no sign of willingness to
compromise.

Iran dismisses the impact of sanctions, saying trade and
other measures imposed since the 1979 Islamic revolution toppled
the U.S.-backed shah have made the country stronger.

During a public speech in Iran's western province of Ilam on
Wednesday, President Mahmoud Ahmadinejad implied Tehran had no
intention of changing course.

"We will not yield to pressure to abandon our rights ... The
Iranian nation will not withdraw from its right (to nuclear
technology) even one iota because of the pressures," said
Ahmadinejad, whose firm nuclear stance has stoked many ordinary
Iranians' sense of national dignity.

Some Iranian oil officials have admitted that foreign
sanctions were hurting the key energy sector that was in
desperate need of foreign investment.

Though four rounds of the U.N. sanctions do not forbid the
purchase of Iranian oil, many international oil firms and
trading companies have stopped trading with Iran.

"SHOWING THEIR TEETH"

The United States and Israel have not ruled out military
action if sanctions fail to rein in Iran's nuclear work.

An Iranian analyst who declined to be named said the
leadership could not reach a compromise with the West over its
nuclear activities as it "would harm its prestige among its core
supporters".

As a result, he said, "Iranian officials are showing their
teeth to prevent a military strike".

But he added that closing the Strait of Hormuz would harm
Iran's economy, undermining the Iranian leadership ahead of a
parliamentary election in March.

The election will be the first litmus test of the clerical
establishment's popularity since the 2009 disputed presidential
vote, that the opposition says was rigged to secure
Ahmadinejad's re-election.

The vote was followed by eight months of anti-government
street protests and created a deepening political rift among the
hardline rulers.

With the opposition leaders under house arrest since
February and the main reformist political parties banned since
the vote, Iranian hardline rulers are concerned a low turnout
would question the establishment's legitimacy.

Frustration is simmering among lower- and middle-class
Iranians over Ahmadinejad's economic policies. Prices of most
consumer goods have risen substantially and many Iranians
struggle to make ends meet.

LIMA, Dec 9 An indigenous federation opposed to
a recently approved plan for oil drilling in the Peruvian Amazon
said on Friday that native communities will physically block any
attempt by oil companies to operate on their lands.

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